Why Apple Added Debt, Why It's Not My Business, Why It Bothers Me Anyway
So, Apple has begun the process of taking on a fairly massive amount of corporate debt.If you actually go and read the article, it'll explain fairly plainly why the company is doing this (even though they have literally more cash than they can deal with, and just last week announced a plan to buy back more stock and increase dividends moving forward). The short answer is this:
- interest rates are at insanely, historically low levels
- MOST of Apple's massive cash stack is overseas and would be taxed fairly heavily if repatriated
- Wall Street appreciates that Apple makes more money in every business it's in than it's competitors combined, but not enough to appropriately value their stock.
- Taking on this debt and then pumping the cash back to investors with buy-backs and dividends makes Wall Street happy.
Again, the article states it all with facts and the appropriate terminology, but those bullet points get you the gist of the thing.
Here's why it's none of my business. I don't own Apple stock. Not a single share. In fact (brace yourself) I don't own a single share of any stock! Although, I am about to try to buy into both Facebook and Tesla, if you were looking for a little inside scoop. I like Apple's gadgets, but that massive cash pile means that they will continue to make them, their stock price doesn't matter a hill of beans to mean, and neither should this debt, right?
Well, here's why it bothers me anyway. Why can't we just agree that a system that punishes a company for success and efficient spending is a bad system? Why can't we agree that an American company should have to pay taxes to the American government on its earnings, even those overseas, but maybe also agree that the current tax rates on those overseas earnings are a little high and anti-competitive if we want to KEEP those American companies? Fix it. Don't bend over backwards, performing some arithmetic black magic that smells like corporate money laundering just because the system is broken.
If you break you foot, and don't let it heal properly, you'll eventually be able to walk, but the leg (and the rest of your body with it) will contort to compensate for the injury. Over time, you'll develop other physical abnormalities and spinal problems as your body rebuilds itself around your injury.
That's what we've done with Wall Street and the banking system. We've rebuilt the system, full of spinal abnormalities and deformities to compensate for the breaks in the system rather than have the necessary operations.
Or at least it seems that way to the guy who keeps thinking about buying stock.